2003 (6) TMI 215 - AT - Central Excise

Rectification of mistake - Limitation - Amendment of - Appeal to Appellate Tribunal - Remedies against order of Tribunal - Limitation - Reduction by amendment - Excisability - Job work - Valuation

Issues Involved
1. Rectification of mistake under Section 35C(2) of the Central Excise Act.
2. Inclusion of the cost of technical know-how in the assessable value.
3. Limitation period for filing rectification applications.
4. Procedural versus substantive rights in the context of limitation periods.
5. Impact of subsequent orders on remand based on rectified orders.

Detailed Analysis

Rectification of Mistake under Section 35C(2) of the Central Excise Act
The applicant filed an application for rectification of a mistake under Section 35C(2) of the Central Excise Act, arguing that an error was apparent on the record in the Tribunal's Order dated 28-4-2001. The Tribunal had to determine whether the cost of technical know-how should be included in the assessable value of the final product, Bournvita, manufactured by the applicant using materials supplied by Cadbury India Ltd.

Inclusion of the Cost of Technical Know-How in the Assessable Value
The Tribunal initially held that the cost of technical know-how would generally form part of the cost of manufacture but would not be included in the assessable value. This created ambiguity, leading to the rectification application. The applicant contended that the cost of technical know-how should not be included in the assessable value, citing that it was merely information governing the manufacturing process and not a tangible cost to be added.

Limitation Period for Filing Rectification Applications
A significant issue was whether the application for rectification was barred by limitation. The original period for filing such applications was four years, but an amendment in 2002 reduced this period to six months. The Tribunal had to decide whether this amendment applied retrospectively to cases where the original order was passed before the amendment. The Tribunal concluded that applying the six-month limitation retrospectively would unjustly deprive the applicant of their right to file a rectification application, as they could not have foreseen the legislative change.

Procedural Versus Substantive Rights in the Context of Limitation Periods
The Tribunal referenced multiple judgments to argue that the right to appeal and file rectification applications is a substantive right, not merely procedural. This right cannot be taken away by a subsequent amendment unless explicitly stated by the legislature. The Tribunal emphasized that the reduction in the limitation period should not apply retrospectively to extinguish existing rights.

Impact of Subsequent Orders on Remand Based on Rectified Orders
The Tribunal addressed the argument that the applicant should have appealed the Order-in-Original on remand rather than filing a rectification application. It was clarified that since the Order-in-Original was based on the Tribunal's previous order, which was now being rectified, the applicant's approach was justified. The rectification of the Tribunal's order would inherently affect the validity of the subsequent Order-in-Original.

Conclusion
The Tribunal allowed the rectification application, deleting the ambiguous sentences from Paragraph 8 of the original order. The Tribunal held that the application was not barred by limitation and that the cost of technical know-how should not be included in the assessable value. This decision was based on the principle that substantive rights cannot be retrospectively affected by procedural amendments unless explicitly stated by the legislature.

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